Sunday, 5 July 2009

More for Less - again

(By Richard Holway 4.00pm 5th July 09) Further to my piece BT snippets of 19th June which reported on BT’s plan to lend employees to competitors, BT is now offering pay cuts for holidays. Apparently you get 25% of your salary up-front to go on holiday for a year. This is all because BT seems desperate to avoid compulsory redundancies. As I said in my earlier post “I do fully realise that it can often cost the equivalent of 1+ years salary to ‘let someone go’. But adjusting the cost base and allowing for a renewing of the skill-set are pretty key to any dynamic business.”

Looks like my views are echoed by others. Dominic O’Connell writing in today’s Sunday Times says “There comes a point where BT has to bite the bullet. If a company thinks it can manage without some people for a month, should it perhaps try to cope without them for the other 11? A pact with its trade unions to avoid compulsory redundancies looks harder and harder to preserve. If Ian Livingston, the CEO, who revels in his reputation as a cost-cutter, is serious about stamping his own mark on BT, then tinkering such as this is not enough”.

Hear, Hear!

It is also an interesting observation that BT has so far got rid of 15,000 people with another 15,000 due to go this year (out of c100,000 staff). One assumes BT is still providing a ‘normal service’ ? Which does beggar the question 'what were all these people doing before?'

This point has relevance to the 'public sector cuts' debate which is raging right now. There seems to be an assumption that any cost cuts will be reflected in a reduction in services or service levels. I see no reason why this should automatically apply. (I made this point strongly in my 16th June post Cuts in Public spending do not have to mean cuts in Public Services)
If our ministers were in business, they would be told to produce the same (or higher) level of service for a lower cost which would lead to all kinds of efficiency measures and pressure on pay and conditions (maybe even a bit of offshoring!) That's the modus operandi of practically every private sector business right now - so why not the public sector too?

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